Magadan: Russia’s gold mine

Notorious for its sad and cruel past, this was a major transit centre for prisoners sent to Stalin's Gulag labour camps. But the region is also famous for its natural resources.

Gold mining and fisheries are the main source of income for the local economy.

The small glittering pieces of metal stuck on the rubber carpet are the region’s main asset. Magadan is one of Russia’s largest gold producers.

In gold we trust

Howard Golden, a foreign gold miner working in the local industry, provided his assessment of the region’s gold potential.

“Magadan sits right in the middle of the 2,600-kilometer-long belt known as the Okhotsk-Chukotka belt. And I would argue that it is probably the most prospective geological belt in the world for gold and other metals. Magadan is probably sitting on incredible treasure,” he said.

However, not many can take advantage of the region’s riches.

“There are two issues. One, obviously, is the remoteness. This is the infrastructure: it’s almost non-existent in Magadan, and it’s very remote. It’s almost impossible to get access to a lot of the mineral-rich areas. And that takes, of course, money and resources,” Golden explained.

“And the other issue is the legislative framework to get licenses and permits to mine gold here,” the miner added.

Recently, the owner of one of the region’s gold mining companies showed RT his private collection of nuggets.

Nikolay Derezhinets, Polevaya gold mining company, Magadan region:

“I call this one God’s gift. It weighs almost three kilograms,” Nikolay Derezhinets, the owner of Polevaya gold mining company says while displaying a huge ingot of gold.

“It is one of the largest pieces of gold found in the region in a decade. I was offered to sell it for $350,000, but I won’t.”

Looking at all the glitter you can really feel the gold digging fever rising in you.

This is Russia’s El Dorado. But you can’t just take a sieve and pan for gold in these waters. Doing so would be illegal. And some locals say that rule needs to be changed.

Vladimir is chief geologist at a gold mining company. There was a time when he was panning for gold independently, but now the law is hard on independent gold diggers.
“It’s not fair that those who live in this land and know how to get the gold are not allowed to do that. They would sell it to gold mining companies anyway. People here will never stop panning for gold, but now they have to find loopholes,” Vladimir explains.

But Nikolay Derezhinets says independent gold digging can undermine the work of gold mines.

“If they allow it, some 3000 specialists would leave the mines, but very few of them would succeed working on their own. As a result, the region will get less gold, and most of the gold miners will have nothing to put on table,” he elucidates.

“First of all, it depends on the quantity of gold that a person has with them. I think usually the punishment is a prison term. But if you have a small quantity of gold, I think you can get away with just a fine or maybe a warning,” he said.

Andrey Khalkachan, a mining equipment supplier, told RT how different interests conflict with each other in the regional gold-mining industry.

“Throughout the history of the development of gold-mining in the area, it was always heavily controlled by the government. But, because production of gold is declining, they have started talking about the revival of freelance gold-mining,” he said.

“But the bigger players oppose freelance mining. They take advantage of the small guys, because those are the same guys who develop the mines and satellite deposits,” Khalkachan added.

Fishing for gold

Salmon is the region’s other ‘goldfish’. The Okhotsk Sea and the rivers here are now full of salmon.

It’s spawning time. But locals can’t just go and get the fish, even though salmon die after spawning anyway. You have to pay for each of the fish caught in these waters.

People who fish here, legally with a license, mostly come from the city. They just take their catch home. But locals who try to earn a living here, say fishing legally leaves them with nothing. But poaching is too risky. If you’re caught taking more than two salmon, you can end up with a criminal record.

Fishermen are hired by a local company for the spawning period, which lasts around a month. They catch some 50 tonnes of salmon a day, and receive more than three thousand dollars each.

After the month comes to an end most of them go fishing on their own. Although no one admitted to poaching on camera, they say it’s hardly possible to make a living through licensed fishing.

“People are sitting by the seaside, looking at all the fish, but they can’t take it. It’s not normal. These rules make criminals out of honest people. For most people here there’s no other job but selling fish,” Nikolay Oseev, a fisherman, says.

But poachers differ. Some treat the fish in the worst possible way: they catch it, take the spawn for caviar and leave piles of salmons rotting somewhere in the forest.

As for state control, in a region so rich in resources it is difficult to satisfy both: the region’s budget interests and the desire of an individual to get hold of some of the local riches for a better life.

Natalya Kalchevskaya from the local fund for small businesses thinks that local entrepreneurs face a problem of access to finance.

“Our microfinance fund helps them to resolve this issue by providing them resources necessary for the development of their businesses. The majority of our clients are enrolled in retail trade and public catering. Some of them are in construction and services. To tell the truth, over the last couple of months the need for finance increased,” she told RT.

Russia, being a country with vast fish resources, still imports some 30% of its fish. Ella Kim, from the local fishing company, explains why the Magadan fishing industry is mostly export-oriented.

“There is no demand for snow crab or sea snail, for instance, on the local market. People here in Russia, especially in central Russia, do not know what snow crab and sea snails are. They do not know how to cook them. And this kind of product is very popular in Japan and Korea,” she said.